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Gov¡¯t struggling to complete bank mergers

Posted December. 13, 2000 20:38,   


The government is struggling to meet this week¡¯s deadline for bank mergers, having originally planned to integrate Korea Exchange Bank (KEB) and a number of others into a state-run financial holding company as part of the second-phase financial restructuring.

However, as Commerzbank of Germany, a large shareholder in KEB, has not yet approved the plan, the holding company is expected to consist only of Hanvit, Peace, Kwangju and Kyongnam banks.

Goldman Sachs, a large shareholder of Kookmin Bank, officially confirmed that it is reviewing a merger plan with Housing & Commercial Bank (H&CB). Since the labor unions of both banks are strongly opposed to the plan, the final announcement of the merger is not likely to come by the end of the week.

Under its plan to complete the blueprint for bank mergers by Friday, the government decided to encourage blue-chip banks to merge with each other on a voluntary basis.

Commerzbank decided that it is too early to make a decision on the issue, considering the labor union¡¯s resistance and current economic conditions in Korea, said KEB president Kim Kyong-Lim Wednesday before reporters. He said the government would therefore find it difficult to establish the state-run holding company centered on Hanvit Bank and KEB for the time being.

Dow Jones, a U.S. economic news agency, quoted Peter Rose, a Goldman Sachs spokesman, as saying that the company is holding negotiations on a merger with H&CB but denied Korean press reports that an official announcement was imminent. A final decision is being delayed due to the labor union¡¯s resistance, said an official of Goldman Sachs¡¯ local branch office.

KorAm Bank is also pushing a merger and is attempting to persuade its largest shareholder, Carlyle-JP Morgan Consortium, to go along with the plan. Carlyle-JP Morgan has yet to make its position clear.

Finance-Economy Minister Jin Nyum urged management, labor and shareholders to quickly approve the bank merger plans if they are deemed to be moving in the right direction. He voiced concerns that any delay may negatively affect financial markets.

The banking sector is now teetering on the edge of a second general strike. Kookmin Bank president Kim Sang-Hoon was unable to enter his home Tuesday and Wednesday due to a blockade by unionists who are demanding a clear expression of management¡¯s position on the Kookmin-H&CB merger plan. The H&CB labor union is also preparing to hold an overnight sit-in at bank headquarters.